Investment Manager Guidelines

Investment objective
The Manager’s objective is to outperform the relevant benchmarks (after fees and taxes) for each Investment Portfolio.

Diversification principle

The following principle will be applied by the Manager in making any investment decisions:
The Manager regards diversification as crucial to managing investment risk and therefore diversification is a top priority when making decisions on behalf of Members of the Scheme.

Asset classes
The asset class limits of each Investment Portfolio are set out in the table below:

  Conservative Investment Portfolio Balanced Investment Portfolio Growth Investment Portfolio
Equities Up to 20% Up to 70% Up to 100%
Cash/fixed interest balance balance balance

 

The asset class limits ranges listed above refer to the underlying exposure and not the vehicle by which the exposure is obtained.  The Manager may invest directly into the asset class, or gain exposure to the asset class indirectly (e.g. through a unit trust or other type of managed fund).

Default Investment Portfolio
The default Investment Portfolio is the Balanced Investment Portfolio.

Hedging
The Manager may enter into foreign exchange forward contracts and currency options in respect of the Scheme, any Investment Portfolio, or any part of them where it considers it is in the best interests of the Scheme and its Members to enter such contract.

The Trustee and Manager will agree, from time to time, to place a limit on the size of any such contracts.  The Manager will not enter foreign exchange contracts and currency options for the Scheme that give rise to obligations beyond the value of the Scheme's portfolio. The currently agreed limits are 0-100% on permitted assets in the portfolios that are not priced in New Zealand Dollars.

Investment restrictions
The Trustee and Manager recognise that, as financial markets are innovative and market conditions can change dramatically it is impractical to define all possible investments the Manager may wish to make and to apply limits to each of those defined investments that are suitable in all circumstances. Unless the Trustee and Manager agree otherwise, the Manager will take reasonable care to ensure that:

  • Direct exposure to a single commonly recognised investment manager (including any related parties of that investment manager) is limited to 50% (subject at all times to the diversification principle stated above).
  • Direct exposure to any one underlying security (e.g. share, bond) is limited to 7.5% (subject at all times to the diversification principle stated above). Cash, currency hedges and interest rate swaps are excluded, but remain subject to the diversification principle.
  • Direct debt exposure to any one underlying issuer (e.g. bank, corporate) is limited to 15%, and broader exposure (e.g. cash and derivatives) to any one underlying issuer is limited to 50%.

For bond and other debt investments, the Manager will limit total exposure to non-investment grade credit to no more than 25% of a portfolio.
The Manager acknowledges that the diversification principle stated above is a top priority and will endeavour to ensure that actual exposures remain significantly lower than the above limits.
The Manager will take reasonable care to ensure that Investments are liquid so that they can be exited within a reasonable timeframe, and generally in less than a week.